Heavy discount touches new 13-month high on big inventories, cold weather

Canadian heavy crude’s discount versus U.S. benchmark West Texas Intermediate (WTI) crude widened to a fresh 13-month high on Thursday, amid a cold snap in Alberta and large oil inventories in the province.In cold weather, shippers dilute bitumen volumes with additional ultralight oil, taking up more pipeline capacity.

Inventories in Alberta have not yet drained to normal levels after building up late last year due to a temporary outage on the Keystone pipeline and a Canadian National rail strike. The high inventories are weighing on prices, a Calgary-based trader said.

Western Canada Select (WCS) heavy blend crude for February delivery in Hardisty, Alberta, was trading at $24.65 per barrel below WTI, according to NE2 Canada Inc, wider than Wednesday’s settle of $24.30.

The discount was the biggest since December 2018.

Thursday is the last day of the current trading cycle, with Enbridge Inc’s notice of shipments for the Mainline due on Friday.

Light synthetic crude from the oil sands had not yet traded, after settling on Wednesday at $4.50 under WTI.

Global oil prices rose as the signing of the long-awaited Phase 1 trade deal between the United States and China brought some relief to markets